ABSTRACT
Israel did not have a set of rules suitable for the level of the discoveries in 2009–2010. The enormous size of Tamar and Leviathan gas fields brought the matters pertaining to profit, pricing, and export to the forefront of the public debate. The regulation of the natural gas sector required changes in rules related to exploration and production, taxation and profits, as well as domestic use and export of the resource. To address these issues, the government appointed public committees mandated with the task of formulating a new taxation method (the Sheshinksi Committee) and a comprehensive policy for the emerging gas sector (the Tzemach Committee). During the public hearings of these committees and the ensuing debates in the civil society, monopoly and cross-holdings of the Noble Energy and Delek Group, the two largest leaseholders in Israel’s gas fields, became an intensely contentious issue, forcing the government to reduce their holdings to create a level playing field. An unintended consequence of the public debate on the gas issue and the resulting regulatory turmoil experienced by Noble Energy is the negative impact on upstream investment evidenced in the tepid response of major international oil companies to the MoE’s gas licencing round in 2016–17. To maintain a competitive investment climate, Israel needs to provide legally binding guarantees to the investors that minimise political risks and provide a shield against arbitrary or discriminatory acts of the host government.
